Group Benefits

Flexible Spending Account (FSA) Administration

A Flexible Spending Account (FSA ) is a tax-advantaged way to pay for health and/or dependent care expenses. Employees participating in an FSA elect to have a specified dollar amount deducted from their gross salary before taxes are withheld for each pay period. Employees can pay for certain out-of-pocket medical or dependent care costs with pre-tax dollars. Taxpayers who do not itemize can get a tax break using a FSA, as well, making FSAs especially attractive.

There are two main types of FSAs:

Health FSA -- No matter how comprehensive one's health or dental coverage may be there are a number of expenses that may not be covered or only partially covered. To help with these out-of-pocket costs employers can offer a Health FSA.

Dependent Care FSA - A Dependent Care FSA is another type of FSA that employers offer, allowing employees to pay for certain dependent/child care expenses with tax-free dollars. There are many reasons to do this. Working parents may have significant day care expenses, and a growing number of working people are responsible for the care of an elderly or disabled dependent. In either case, employees may well benefit from the tax advantages of a Dependent Care FSA.

Employees may elect to participate in one or both types of FSA accounts. By offering an FSA, employers and employees can reduce their tax liability. Let Clark & Lavey help you in contracting a qualified vendor to outsource the administration of these plans.